TaxTMI 
TaxTMI 
2024 (12) TMI 944
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....rintendent (Authorised Representative) appearing on behalf of the Revenue reiterates the grounds of appeal and also filed a written submission dated 07.11.2024 wherein he made following submissions: A. The Adjudicating Authority has committed an error in dropping the demand of service tax in respect of the construction services provided by the respondent to Indian Chartered Accountant Institute (ICAI) (Rs. 12,80,544/-). ICAI may have been set up by the Act of Parliament and under the control of the Ministry of the Corporate Affairs, but ICAI does not carry out any functions entrusted to municipality under Article 243 of the Constitution. Therefore, exemption from service tax under Notification No. 25/2012 -ST dated 01.07.2012 is not admissible to the respondent. B. The Adjudicating Authority has erroneously dropped the demand of service tax in respect of services provided to Rajkot Municipal Corporation( Rs. 1,40,96,139/-) for construction of Community Hall and Auditorium. The Adjudicating Authority has not examined the aspect of commercial use of auditorium and hall being collected from public by the Rajkot Municipal Corporation. C. The Adjudicating Auth....
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....ract allotted to the respondent. The said letter dated 10.11.2017 has specifically mentioned that the auditorium is operated on non profit basis and only meant for the welfare of the citizens residing in the territorial limits of the Municipality. G. Construction services provided to GIDC, Vapi: The Adjudicating Authority has wrongly dropped the demand of service tax in respect of construction of College at Navsari under the contract of GIDC, Vapi. The Adjudicating Authority has given the findings that GIDC provides services similar to some of the services covered under Twelfth Schedule under Article 243W of the Constitution like Regulation of land use and construction of buildings, planning for economic and social development, construction and maintenance of roads and bridges etc. Therefore, GIDC is a governmental authority as defined under Notification No. 25/2012-ST dated 20.06.2012. The Adjudicating Authority also held that the construction of Engineering College at Navsari was not for commercial or industrial purpose and therefore, the benefit of exemption from service tax is available to the respondent. He relied on the following decisions: • Shapoorji P....
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....nder Notification No.25/2012-ST by Sr. No.12(a).It is submitted that Sr. No.12(a) exempts services provided to government or a local authority or a government authority by way of construction, erection, commissioning, installation etc. for a civil structure or any other original works meant for use other than for commerce, industry or any other business profession. The Commissioner has rightly given benefit of such entry to the respondent. However, without prejudice to the exemption notification being present, the definition of commercial or industrial construction service and works contract service itself exempts construction which is undertaken for a use which is non commercial in nature. : Commercial or industrial construction" means- (a) construction of a new building or a civil structure or a part thereof; or (b) construction of pipeline or conduit; or (c) completion and finishing services such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metaljoinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services, in relati....
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....purpose of education. Therefore it is an essential function of the municipality under Article 243W and hence the benefit of Notification No.25/2012-ST is available to the respondent. It is submitted that the Commissioner is correct in advancing the benefit of Notification No.25/2012-ST inasmuch as GIDC fits the definition of governmental authority inasmuch as it is set up by the Gujarat Industrial Development Act and is controlled by the Government of Gujarat. Furthermore, education is also a subject mentioned under Article 243W (12th Schedule) and hence the impugned order does not call for any Interference. Without prejudice to the Commissioner advancing the benefit of Notification No.25/2012-ST to the respondent, it is submitted that construction of educational institute whether for government or even for a private party is considered to be exempt from payment of service tax. It is a settled legal position that educational institutes are not considered as commercial in nature and hence the definition of commercial or industrial construction services or works contract services which have its own exclusion which states that when the construction is undertaken for non comme....
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....the construction service are Government Authority in terms of Notification No. 25/2012-ST, Serial No. 12(a) and consequently whether the respondent have been rightly allowed the exemption by the adjudicating authority. We find that the appellant have provided the construction service to the following institutions: (1) Indian Chartered Accountant Institute (ICAI) (2) Rajkot Municipal Corporation (3) GIDC for construction of Engineering College at Navsari 5. In respect of the above institution, whether the same are Government Authority for the purpose of granting Exemption Notification No. 25/2012-ST we refer to the relevant exemption entry No. 12 of Notification 25/2012-ST which reads as under:- "12. Services provided to the Government, a local authority or a repair, governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, maintenance, renovation, or alteration of - (a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession;" The definition of term 'Governmental Authority' reads as under: ....
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....ore participation by way of equity or control by Government and set up by an Act of the Parliament or a State Legislature to carry out any function entrusted to a municipality under article 243W of the Constitution; "governmental authority" means an 2(s) authority or a board or any other body; (i) Set up by an Act of Parliament or a State Legislature; or (ii) established by Government, with 90% or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution; 15. Having read the two definitions, first and foremost, it is necessary to ascertain the objective behind the Clarification Notification which amended the Exemption Notification and re-defined "governmental authority". A bare perusal of the Exemption Notification reveals that the exemption therein was only extended to those entities, viz. board or authority or body, which fulfilled the three requisite conditions, i.e. : (a) having been established with 90% or more participation by way of equity or control by Government, (b) set up by an Act of the Parliament or a State Legislature, and (c) carrying out any function entrusted to....
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....n, the necessity for employing rules of interpretation disappears and reaches its vanishing point. 19. This Court in Union of India &Ors. v. Ind-Swift Laboratories Ltd. [(2011) 4 SCC 635 = 2011 (265) E.L.T. 3 (S.C.)= [2011] 30 STT 461 (SC)], held that harmonious construction is required to be given to a provision only when it is shrouded in ambiguity and lacks clarity, rather than when it is unequivocally clear and unambiguous. 20. What is plain and ambiguous from a bare reading of a provision under consideration must be interpreted in the same way as it has been stipulated and not in a way that it presumes deficiency and radically changes the meaning and context of the provision. This is the view expressed in the decision of a five-judge Bench of this Court in Commissioner of Sales Tax, U.P. v. Modi Sugar Mills Ltd. [(1961) 2 SCR 189]. The relevant passage therefrom reads as under : ........ In interpreting a taxing statute, "10. equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them. It must interpret a taxi....
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....use 2(s) manifests the legislative intent of prescribing an alternative. Going by the golden rule of interpretation that words should be read in their ordinary, natural, and grammatical meaning, the word "or" in clause 2(s) clearly appears to us to have been used to reflect the ordinary and normal sense, that is to denote an alternative, giving a choice; and, we cannot assign it a different meaning unless it leads to vagueness or makes clause 2(s) absolutely unworkable. We are fortified in our view by the decision of this Court in Sri Jeyaram Educational Trust v. A.G. Syed Mohideen [(2010) 2 SCC 513], where it was held thus : It is now well settled that a provision of "11. a statute should have to be read as it is, in a natural manner, plain and straight, without adding, substituting or omitting any words. While doing so, the words used in the provision should be assigned and ascribed their natural, ordinary or popular meaning. Only when such plain and straight reading, or ascribing the natural and normal meaning to the words on such reading, leads to ambiguity, vagueness, uncertainty, or absurdity which were not obviously intended by the legislature or the lawmaker, a cou....
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....e (ii) relates it with the long line provided after that and, by no stretch of imagination, the application of the long line can be extended to sub-clause (i), the scope of which ends with the semicolon. We are, therefore, of the opinion that the long line of clause 2(s) governs only sub-clause (ii) and not sub-clause (i) because of the simple reason that the introduction of semicolon after sub-clause (i), followed by the word "or", has established it as an independent category, thereby making it distinct from sub-clause (ii). If the author wanted both these parts to be read together, there is no plausible reason as to why it did not use the word "and" and without the punctuation semicolon. While the Clarification Notification introduced an amended version of clause 2(s), the whole canvas was open for the author to define "governmental authority" whichever way it wished; however, "governmental authority" was re-defined with a purpose to make the clause workable in contra-distinction to the earlier definition. Therefore, we cannot overstep and interpret "or" as "and" so as to allow the alternative outlined in clause 2(s) to vanish. 28. Let us consider the problem from a dif....
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.... Court and the Orissa High Court extending the benefit of the Exemption Notification to the educational institutions, and a fortiori, to SPCL. 29. We need not draw guidance from any of the decisions cited by Ms. Bagchi, except one, on the question of construction of the relevant clause because none of those decisions had the occasion to deal with the issue emanating from the Exemption Notification and the Clarification Notification that we are tasked to consider. 30. Ms. Bagchi heavily relied on the decision of a five-judge Bench of this Court in Dilip Kumar (supra) to urge that in case of any ambiguity in interpreting an exemption notification, the interpretation that favours the revenue must be adopted; also, the burden of proving applicability of the exemption notification would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. At the outset, we record that there is absolutely no quarrel with the proposition laid down therein. We, however, reject the contention of Ms. Bagchi based on Dilip Kumar (supra) because the ratio is not applicable to the facts and circumstances of this case. This, for....
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....harm or magic in the plainness of such words but because plain words may be expected to convey plainly the intention of the legislature to others as well as judges." 32. Keeping the above-said ratio in mind, an interpretation of the relevant provision resulting in the expanded scope of its operation cannot in itself be sufficient to attribute ambiguity to the provision. 33. To make a statute workable by employing interpretative tools and to venture into a kind of judicial legislation are two different things. Merely because the statute does not yield intended or desired results, that cannot be reason for us to overstep and cross the LakshmanRekha by employing tools of interpretation to interpret a provision keeping in mind its outcome. Interpretative tools should be employed to make a statute workable and not to reach to a particular outcome. Conclusion 34. For the reasons aforesaid, we find no merit in these appeals. The impugned judgments and orders are upheld and the appeals are dismissed, without any order for costs." • NJ Devani Builders Pvt. Ltd. vide Final Order No. 12227/2023 dated 06.10.2023 "The issue involved in t....
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....able to service tax or not? (VI) whether demand is hit by limitation? 17.2 Before deciding the issues, it is necessary to go into the background of the case. As stated in the brief facts, the officers of the DGCEI Zonal Unit, Ahmedabad, acting on the intelligence, searched the office premises of the assessee at Ajmer and Ahmedabad on 18-7-2011 and resumed certain documents/records. Investigation conducted in the matter revealed that assessee has not paid service tax on two projects. The investigating team observed that two projects being constructed on behalf of NBCC i.e. construction of P.G. Hostel at SVNIT Surat and ESIC Hospital at Jaipur, are liable for payment of service tax. Accordingly SCN, dated 10-9-2012 for demand of service tax of Rs. 5,45,77,175/- was issued by ADG O/O the DGCEI Zonal Unit, Ahmedabad. 17.3 Now I proceed to decide the case on merit. First of all I take up the issue of whether the assessee is sub-contractor of NBCC or [not]. Reliance is placed on letter No. NBCC/AGM/LOA/2009/1208, dated 15-1-2009, written by M/s. NBCC to the assessee, wherein cost of the project, period of construction and other terms and conditions of the agreement were....
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....d by you on the Bill of Quantities of the tender documents on terms and conditions referred. It is also requested to mobilize immediately your site personnel plant and equipments and other resources so that work can be started as per schedule." I find that nature of contract, their terms and conditions, the running account bills raised by the assessee for payments of the work done, the annual payment details with cheque numbers, which shows the amount for VAT on work contract, all these facts leads to the conclusion that the activity undertaken by them fall under works contract service. I draw my inferences from the definition of service given under section 65(105) (zzzza) of the Finance Act 1994 for works contract which reads as "to any person, by any other person in relation to the execution of a works contract, excluding works contract in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams. 17.6 Explanation. - For the purpose of this sub-clause, "works contract" means a contract wherein (I) transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods, and (ii) such contract is for carrying ....
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....able entry needs to be understood with reference to the language used in such entry and, accordingly, a given service has to be classified, which is the mandate of sub-section (1) of Section 65A of the Finance Act, 1994. We have not found anything in the text of the definition of "works contract" to indicate that turnkey/EPC projects for irrigation are excluded from the ambit of taxable service of works contract. With regard to "dams", we have already expressed our views in para (10.6) of this order. As rightly submitted by the learned Special Consultant for the Department, there is no room for any intendment or assumption or presumption and, where the words of the statute are plain and clear, there is no room for applying any of the principles of interpretation. In this context, the reliance placed by the Special Consultant on the decision of the Apex Court in Grasim Industries case is found to be apposite. 10.13 Clause (e) of the definition of works contract--turnkey projects including engineering, procurement and construction or commissioning (EPC) projects--clearly conveys the legislative intent underlying the definition of "works contract" in relation to turnkey proje....